Rural income is likely to shore up in coming months; Nestle’s Suresh Narayanan explains why

While declining rural incomes have caused much woes to India’s FMCG sector, the same is expected to shore up in the coming months thanks to various factors such as good monsoon.

While declining rural incomes have caused much woes to India’s FMCG sector, the same is expected to shore up in the coming months thanks to various factors such as good monsoon. “With predicted good monsoon, a very good harvest of the primary staple goods in the country, and also with some of the opportunities that the government has recently announced in terms of going beyond APMC for farmers to be able to sell their produce to the highest bidders, I do hope that it shores up rural incomes,” Suresh Narayanan, chairman and managing director, Nestle India, said in an interview to ET Now recently. He also said that the Indian arm of Swiss FMCG major has been witnessing stronger rural demand as compared to urban India. Tier 2,3 cities and semi-urban areas also reported better growth. 

With migrants now returning to their homes as the country imposed a nationwide lockdown, Nestle India expects that it may also help rural consumption. “The mass migration to rural areas could bump up rural consumption. Rural consumption continues to be stronger than urban demand,” Suresh Narayanan said. Talking about the aftermath of coronavirus lockdown, he said that the company expects some inflation after the pandemic settles down, adding that a certain level of healthy inflation is helpful to the economy. 

Meanwhile, the company is on track to fix the supply chain issues erupting out of coronavirus lockdown and has said that about 75-80% of Nestle India’s factories are now operational. The demand has also gone up for brands in home consumption, Suresh Narayanan told the news channel. “There is a greater engagement for brands in home consumption,” he said. According to the latest report by Nielsen on FMCG sector, the industry has witnessed a sharp fall in April with gross value of FMCG going down by 34% as compared to a year ago. This includes the figures from both traditional trade and modern trade.